Vornado, the owner of more than 100 million square feet
(9.3 million square meters) of U.S. properties, has a 26 percent
stake in LNR. The business produced $22 million of income in the
first half for Vornado, yielding a return of more than 30
percent, Fascitelli said today during the New York-based
company’s first earnings conference call.

“It’s been a terrific investment,” Fascitelli said.
“It’s met all our expectations. We are enjoying great results,
but right now the owners of that are exploring strategic
alternatives, so that’s on its own time frame.”

Vornado is seeking to simplify its operations in response
to shareholder complaints that it has too many disparate
businesses. The real estate investment trust is focusing on its
urban street retail properties and its office buildings in New
York and Washington, and it initiated conference calls in
response to demands for better communication with investors.

Vornado bought its stake in Miami Beach, Florida-based LNR
in July 2010 along with iStar Financial Inc., Cerberus Capital
Management LP and Oaktree Capital Group LLC. LNR’s main business
is working out commercial loans threatened with default, a
process known as special servicing. The company manages about
$153.7 billion of securitized loans, including more than $22
billion that are delinquent, according to data compiled by
Bloomberg.

‘Critical Market’

The acquisition gave Vornado an eye into a “critical
market” of more than 1,400 troubled mortgages, Chairman Steven
Roth said last year in a letter to investors.

Vornado has already sold $821 million of assets out of a
goal of $1 billion, Fascitelli said. The company may make
another $1 billion in dispositions after that, he said.

Properties on the market include the Green Acres Mall in
Valley Stream, New York, while Vornado’s Alexander’s Inc.
affiliate has Brooklyn’s Kings Plaza shopping center up for
sale, Fascitelli said. The company also intends to sell
Eatontown, New Jersey’s Monmouth Mall, as well as retail
properties in Puerto Rico.

Funds from operations, which gauges a REIT’s ability to
generate cash, fell 32 percent in the second quarter to $166.7
million, or 89 cents a share, Vornado said yesterday. Most of
the decline was because of a $58.7 million drop in the value of
its investment in J.C. Penney Co.

Penney Stake

Roth said on the call that Vornado is “committed to” hold
onto its 11 percent stake in J.C. Penney because it expects to
benefit from an upgrade of the Plano, Texas-based retailer’s
selling strategy.

“We have enormous confidence in” J.C. Penney Chief
Executive Officer Ron Johnson and his team, he said. “They’re
in the middle of making some very important and proper mid-course corrections right now. We’re in this thing for the long
haul.”

Vornado fell 2.4 percent to $83.59 in New York trading. The
shares have gained 8.8 percent this year, compared with a 14
percent advance in the Bloomberg REIT Index.

Vornado previously skipped quarterly earnings conference
calls, which are standard for most public companies. Roth said
at a conference at Georgetown University in April that he felt
that by disclosing business activities in regulatory filings,
Vornado would provide more detail than their competitors. Chief
Financial Officer Joseph Macnow would spend the three days
following each quarterly report on the phone, discussing the
results individually with investors and analysts.

“That was our preferred form of communication,” Roth said
at the Georgetown conference. “Everybody says you guys are
idiots, the stock doesn’t trade where it should trade, and the
reason is you don’t do conference calls.”